Groupon Inc. shares took a steep plunge of over 20% in Thursday's extended session after the discounting marketplace revealed its plans for a new rights offering and acknowledged the "challenged" state of its business.
Rights Offering to Shareholders
In an announcement made on Thursday afternoon, Groupon stated that its board has approved an $80 million fully backstopped rights offering to every holder of its common stock. This offering will be executed through the distribution of nontransferable subscription rights, allowing shareholders to purchase common stock at a price of $11.30 per share.
Third Quarter Results Disappoint
Groupon also released its third-quarter results, which showed a decline in revenue. The company reported revenue of $126.5 million, down from $144.4 million in the previous year. This figure fell just short of the $129.7 million FactSet consensus, which is based on estimates from three analysts.
Furthermore, Groupon recorded a net loss of $41.4 million, or $1.31 per share, compared to a loss of $56.2 million, or $1.86 per share, in the same period last year.
Focus on Delivering Projects and Return to Growth
Interim CEO Dusan Senkypl expressed his determination to reinvigorate Groupon's marketplace and restore the company's growth. Senkypl stated, "We are turning our focus to delivering projects across product, engineering, sales, marketing, and revenue management that we expect will reinvigorate our marketplace and position our business to return to growth."
Senkypl further added, "While we did not make as much progress on key projects as I expected and our business continues to be challenged, I am pleased to see sequential improvement in our financial performance, Local Billings return to growth, and our plan to strengthen our liquidity position."
Co-Founder Eric Lefkofsky Steps Down from Board
In addition to the rights offering, Groupon announced that co-founder Eric Lefkofsky intends to leave the company's board of directors. Lefkofsky expressed confidence in Groupon's new management team and the recently announced financing strategy, stating, "With a new management team and the announcement of today's financing strategy, I am confident that Groupon is on the right track to become the ultimate destination for experiences and services."
Share Price Movement
Groupon's stock has witnessed a significant increase of 58% year-to-date. However, it remains down 97% from its all-time high in 2011.
